Welfare Recipients Sue State for More Aid : Social programs: Service agency joins lawsuit calling for California to keep pace with the cost of living. But Wilson says spending must be cut in all areas.

Three welfare mothers and a social service agency filed suit against the state Wednesday, contending that California’s benefits fall far short of the cost of living and that the state has intentionally failed to update them.

The suit, filed by the California Homeless and Housing Coalition and welfare recipients in Los Angeles, San Francisco and Butte counties, marks the latest salvo in the battle over aid to the poor, which Gov. Pete Wilson is seeking to settle with a sweeping November ballot initiative.

California’s welfare grants are the nation’s fourth highest, and Wilson contends that the state’s economic problems are so advanced that all public programs, including Aid to Families With Dependent Children, need to be scaled back.

But Melinda Bird of the Center on Law and Poverty, one of several public interest law firms representing the welfare recipients, said the state grants already are so low that more than 1,000 families a month in Los Angeles County alone wind up homeless because public housing is scarce and their AFDC grants fail to cover high local housing costs.

Bird cited a report released this month by Consumers Union, publisher of Consumer Reports magazine, which found that a typical AFDC family in Los Angeles--made up of a single parent and two children--would need $1,323 a month to live at even a modest, low-cost standard. The figure is about twice the $663 a month that is the state’s maximum grant for a family of three.

“It doesn’t go far,” said Belen Reyes, a 24-year-old East Los Angeles mother who is one of the plaintiffs in the case. “We can’t buy meat because it’s too expensive. We always have to look at the K mart papers to see what’s on special so we can buy clothes. . . . I had to sell my car a couple weeks ago because the refrigerator broke. I had to ask, what do I need more, a refrigerator or a car?”

But by far the biggest expense, she said, is the $587 she and her sister pay each month for rent. The two women, both on welfare, moved in together after Reyes and her husband separated. Reyes has one child, a 5-year-old son with medical problems; her sister has two children. Reyes gets $535 a month in AFDC money and $135 a month in food stamps. Her sister’s grant is $630 a month, with a food stamp stipend of about $155.

Reyes said she has applied for a Section 8 housing subsidy, and has been on the waiting list for four years. Last year, she was told she could get a space in public housing, but she refused to take it because the only available openings were in Nickerson Gardens, a drug- and gang-ridden project in Watts.

Her rent money gets her and her sister a run-down, two-bedroom house in East Los Angeles that is next door to her son’s school--which she likes--but also adjacent to the Ramona Gardens housing project. “We got rats and roaches and the landlord don’t do nothing about it,” she said.

Nonetheless, the rent soaks up about half of their income each month. If for some reason her sister moved out, she said, she could not afford to live on her own.

The lawsuit, filed in San Francisco County Superior Court, alleges that the federal Family Support Act of 1988 requires states to re-evaluate the standard by which they calculate AFDC every three years. By law, it maintains, California should have reassessed its “standard of need” last October, but so far has not.

Jennifer Nelson, spokeswoman for the state Health and Welfare Agency, denied that the state is ignoring federal law.

“My understanding is that the law says we are to re-evaluate the needs standard upon direction from the federal government,” she said, “and we have not received that direction.”

In fact, Nelson said, the agency has not heard from the federal government on the needs standard since last June, when it returned a survey to the Department of Health and Human Services and was told “they didn’t need anything else from us.”

Nelson and others said it would cost the state about $3.8 billion to bring benefits into line with the Consumers Union figures.

“They’re advocating a massive increase at a cost of hundreds of millions of dollars to taxpayers at a time when every area of the state budget is tightening its belt,” said Amy Albright, campaign spokeswoman for Wilson’s proposed Taxpayer Protection Act.

“At a time of extremely limited resources, every dollar the state would invest in welfare is a dollar taken away from schools or preventive health programs for children,” Albright said.

But Rob Leonard, Southern California coordinator for the California Homeless and Housing Coalition, said welfare programs cannot afford the proposed cuts either.

“When families already face hunger and homelessness every month, how can anyone talk about cutting welfare grants even further?” he said.